Employer Association at Work: Competitive Tripartism and the Singapore National Employers' Federation (SNEF) 1980-2000

Friday, 3 July 2015: 2:15 PM-3:45 PM
TW2.3.02 (Tower Two)
Kah Chun Bernard Gan, School of Management, University of New South Wales, Sydney, Australia
Peter Sheldon, School of Management, University of New South Wales, Sydney, Australia
David E Morgan, School of Management, University of New South Wales, Sydney, Australia

Historically, employer associations (EAs) have provided their members with collective benefits unavailable to individual firms, to counter trade unions, and influence government labour policy. EAs can also regulate, or remove, key market pressures - such as competitive undercutting of wages.  While EAs were predominantly defensive in conception and development, the growing influence of neo-liberalism and de-industrialisation from the 1980s has significantly attenuated this defensive industrial relations (IR) role in the West.  This has created for many Western EAs challenges to their purpose, identities, and strategies for organizational survival (see eg Sheldon, Nacamulli, Paoletti and Morgan, 2014*). What has been happening outside these Western countries?

This paper investigates EA behaviour in Singapore between 1980 and 2000. By furthering the study of EAs in East Asia, it seeks to broaden the largely Western focused and oriented literature. Neglect of East-Asian EAs is now more glaring given the region’s growing economic prominence, reflecting economic globalization allied with the demands of capital intensive, or more recently ‘knowledge-based’ economies.

We argue that EAs’ conventional defensive, IR orientation, and strategic trajectory, may significantly alter under conducive national conditions. We found that the Singapore National Employers’ Federation (SNEF) played a key organizational role in a new ‘competitive tripartism’ emerging after 1980. The system drew on three principles: partners collaborating to raise economic performance, conspicuously at the organizational level, competiveness is externally oriented and, finally competitiveness draws on political harmony and social cohesion as a means(to raise competitiveness) rather than simply ends. The experience of SNEF, in accommodating the shift from conventional IR tripartism to ‘competitive’ tripartism, affords a particular insight into the nature a significant East-Asian EA.

Singapore in Asia

Asian industrialization post-WWII largely followed the Japanese experience - State and bureaucracy led, albeit under varying types of government – where IR models emerged as subordinate institutions, serving rapid development (eg Kuruvilla, 1996).  The political imperatives of stability and social cohesion were predominant, as modernization was significantly more temporally compressed than in the West. In Singapore, the dominant, People’s Action Party (PAP) secured such stability and cohesion through an enduring government-union nexus, within a wider tripartism, that underpinned successful economic development in the 1960s and 1970s.

SNEF and the shift to Competitive Tripartism

SNEF, formed in 1980, formalized institutional tripartism to complement PAP’s 1979 ‘second industrial revolution’ policy. This paper examines SNEF’s role/s in the early decades of the new ‘competitive tripartism’. This second revolution centred on rapidly building a high-skill, high-wage, capital intensive economy. SNEF’s emergence signaled PAP’s desire to make tripartism work – faster – increasing institutional flexibility to build Singapore’s capacity to cope with economic challenges and shocks (Sheldon, Gan and Morgan, 2015). The transition experienced two economic ‘shocks’ – an internal/external one in 1985, and the East Asian financial crisis in 1997.  Each provided change impetus for SNEF, the union peak organization, and demonstrated the inexorability of PAP’s policy trajectory to both.

SNEF retained its predecessors’ representation on tripartite bodies including the key National Wage Council (NWC) and Industrial Arbitration Court (IAC), and others. Its representation extended to new bodies under competitive tripartism addressing diverse policies (older workers, retirement age, employment legislation and similar).  Strongly symbolic was PAP’s call for a ‘New-style NWC’ encompassing, decentralised bargaining, enterprise unions, flexible wages, and other features (SNEF, 1981; 1984).  Change emerged, as the 1981 NWC recommendation for two-tiered wages, then surfaced as a (tripartite) sub-committee in 1986 following the first shock.  A flexible wage system (FWS) appeared in the public sector in July 1988, with a further tripartite committee in 1993 and more change.  Amendments to the Employment Act, and Trade Union Act from the mid-1980s essentially downgraded IR issues, whilst raising flexibility and the importance of productivity.

The second shock triggered a conspicuous symbolism, the Ministry of Labour (MOL) was renamed the Ministry of Manpower (MOM) in 1998.  It signalled a deeper shift to a national manpower strategy – MANPOWER 21 – from 2000, in which MOL’s traditional focus on labour and harmonious IR was reconfigured to MOM’s focus on creating a globally competitive workforce to face economic globalisation. Crucially for SNEF, MOM reached into enterprise-level human resource development (HRD), as well as a new coordinated human capital management (HCM) system.  Unique in Asia (see Frenkel and Yu, 2014), competitive tripartism systematically combines human capital objectives, while retaining structural elements of IR-based arrangements.  Each partner was to play its role – government through MOM 21, unions through NTUC 21, and SNEF 21 (1997-1999) by addressing employers’ challenges.  

SNEF’s changing role in 1980s and 1990s registered in its revenue structure. Growing demands on SNEF – from employers (for expertise and information), and representing employers – created greater costs.  The emphasis on ‘competitive’ effects of EAs strategic activities, in contrast to defensive IR, saw SNEF expand operations, and precipitated more commercial pricing.  Government support for HRD programs, services to employers, and consultancies, all generated new income. Revenue markedly shifted from membership dues EA collective (representational) and selective goods (targeted free services for members), to elective goods, that is, commercial fees for service(to members, and non-members).  Total revenue rose from 1980 (as membership doubled to 1,813 firms) to 2000, critically, commercial fee income rose from 10 percent to 70 percent by 1998, bringing SNEF much closer to the revenue profile of Western EAs facing decentralisation (Sheldon et al, 2014).

Local knowledge was important for its institutional cohesion and flexibility, SNEF adopted ‘constant distributed leadership’. The Council combined equal representation of large (mostly MNCs) and local (SME) firms, the latter holding a majority in the top four positions, with a constant role for key members.  SNEF thereby retained continuity, and respect, as an effective conduit between its Council, Tripartite Committees, and the business community. Particularly prominent was Stephen Lee, first as Vice-President, then long-term President (from a SME). At the personal level, informal rapport and influence was encouraged amongst tripartite members, illustrated in annual golf tournaments, which drew on a deep system of patrimonial social relations to sustain harmony, as SNEF undertook new functions in Singapore’s tripartite framework.

*in full paper